Reboot Your LifeTampa Student Loan and Bankruptcy Attorney Blog

There’s a lesser discussed requirement for TEPSLF: If the borrower is not in an IDR plan at the time they apply for TEPSLF, the previous 12 months of payments and the last payment made have to be at least as much as they would have paid in an IDR plan.  If they weren’t, the borrower would have to make potentially higher payments for a year in an IDR plan before they rec’d forgiveness.

However, if the borrower has been in the Covid Forbearance since March 2020 and they filed for TEPSLF now, they would meet that requirement because everything has been set to $0. They would need to file before the Covid Forbearance is over (1/31/2022) to avoid this issue with TEPSLF.

Also Note: The PSLF Temporary Waiver makes TEPSLF unnecessary for now as all repayment plans are eligible.  If a borrower wasn’t ready for TEPSLF until after 1/31/2022, they may be eligible through the Waiver.

A longstanding problem has plagued PSLF borrowers when they try to get their 120 payments calculated for public service student loan forgiveness.  Lost records, payments not counting b/c they were for the wrong amount even by a few pennies, paid ahead status, wrong payment plans, change in servicers, multiple year long delays —  I could go on and on…. This week’s announcement by ED that it will start to more broadly interpret the rules surrounding what a qualifying payment is will help tremendously.  Here’s some insight into what we may start to see shortly:

Ian Foss of US ED offered some interesting details during Wednesday’s negotiated rulemaking as he explained the emergency action, and what changes they hope to make permanent. If we understood him correctly they want to get away from counting payments completely and simply give credit for months since entering repayment on any FFEL or DL. This is the result of counting all payment plans, as well as some/all deferments, and maybe even forbearance periods. This approach would also solve all the problems created by the 15-day on-time right-amount payment rule, for all those who were told the wrong payment amount, made lump sum payments from assistance programs, etc.

As things stand now, we aren’t seeing any help out there along these lines for those with Parent Plus loans or Spousal FFEL Consolidation loans — YET.  Stay tuned…

So what’s on tap for today?  Huge news, the Public Service Loan program will now consider payments on Federal Family Education Loans (FFEL or FFELP).  ED’s press release for this PSLF overhaul can be found here.  This is the biggest roadblock for student loan borrowers who have attempted to have their student loans forgiven due to public service.  Our law firm has fought this issue for years, even filing class actions with class co-counsel against Navient and Great Lakes, when our clients alleged that their servicers led them down a path toward forgiveness only to find it later blocked when they had the wrong loan type.  Or making the wrong payment.  No one told them this.  Instead, they were told they had to start their ten years of payments ALL OVER AGAIN after they changed their loan type to now qualify.

No more.  There are some new hurdles, but with proper guidance, everyone who has worked public service for ten years will now finally receive the forgiveness they were promised.  Things to know:

• If you’d been denied for filling out the forms wrong but have made 120 payments on a Direct loan you will automatically receive a refund for any qualified payments you made in excess of 120.